On July 2, 2013, Degaro Innovations Corp. entered into a farmout agreement with Blue Water Petroleum LLC (farmor) relating to certain leased lands represented by 12,979.28 gross acres located in Big Horn County, Montana. Under the farmout agreement, farmor granted to the company, as farmee, all of farmor's right, title and interest in and to the leases covering the leased lands (earned interest), subject to the completion of the work program.

Farmor reserved and retained an 8% royalty interest in the leases prior to payout (as defined in the farmout agreement) and a 16% royalty interest in the leases after payout for each 40 acre drill site, or portion thereof, located within the leased lands. As consideration for the earned interest, the company agreed to complete the following work program: On or before December 31, 2013, with respect to an initial drill site: provide capital to deepen the existing 11-22 Tribal water well, and prepare for water production necessary for injection project; provide capital to conduct required EPA testing of the designated #51122 injection well, and prepare for injection operations; provide capital to drill two additional oil production wells, and prepare wells for oil production; and provide capital for steam injection testing of designated injection well and four oil production wells. (two currently existing); on or before December 31, 2013, drill and complete two permitted exploration wells, to a depth not to exceed 1,500 feet, in Sections 10 and 21, Township 5 South, Range 25 East in Big Horn County, Montana; provide farmor with a $50,000 advanced royalty payment for working capital purposes upon signing of the farmout agreement.

Upon the completion of the work program, the company agreed to complete the following drilling program obligations: drill and complete an injection well and four surrounding producing wells. The company is required to commence drilling on or before April 30, 2014 and commence steam injection operations on the wells on or before August 31, 2014; drill and complete an injection well and four surrounding producing wells. The company is required to commence drilling on or before April 30, 2015 and commence steam injection operations on the wells on or before June 30, 2015; provide farmor with a $50,000 advanced royalty payment for working capital by April 30, 2014.

The company may extend the deadlines for these drilling program obligations for delays caused by permit delays or delays caused by fire, flood, weather, Acts of God and other delays beyond control for specified periods not to exceed 120 days in total. If the company elects not to complete the work program or the drilling program or fails to complete the requirements of the programs by the deadlines set out therein, then earned interest shall revert to farmor, the farmout agreement shall terminate, and farmor shall have no further rights or remedies with respect to failure to complete the programs; except that the company shall retain the earned interest earned with respect to the initial drill site and the earned interest earned with respect to any wells drilled under the drilling program. In the event any portion of the earned interest reverts to farmor, the company shall execute and deliver any transfer or assignment documents reasonably requested by farmor to evidence the reversion of the earned interest to farmor.

Farmor also agreed to transfer all geological and engineering data to the company, and any information pertaining to the project. Farmor also requires the company to change corporate name to Blue Water Petroleum Corp. which will effect as soon as practicable.